A New Focus for Camera Makers

With Profits Tight in the Point-and-Shoot Market, Manufacturers Carve Out Niche With Higher-End, Mirrorless Models

A revolutionary mirrorless technology gives new compact cameras almost the same quality as professional cameras. The WSJ's Deborah Kan speaks to Daisuke Wakabayashi about new players coming into focus.

By

Daisuke Wakabayashi

April 15, 2012 7:04 p.m. ET

When shopping for a higher-end digital camera, photo enthusiasts typically choose between Canon or Nikon.

But a cadre of electronics companies are posing a threat to that dominance by refashioning bulky professional cameras into sleeker, more affordable models.

Camera makers such as Panasonic Corp.PCRFY0.34%, Sony Corp. and Olympus Corp.OCPNY0.13% have struggled to eke out profits from the highly competitive point-and-shoot segment, which, because the cameras are relatively easy to manufacture, has low barriers to entry.

To reverse those fortunes, they are waging war in the higher-end market against Nikon Corp.NINOY1.07% and Canon Inc.,CAJ0.95% which sell about 75% of the world's single-lens-reflex cameras, the model of choice for professional and serious amateur photographers.

The challengers are hoping to gain market share from an emerging type of camera that packs high-end features into a compact design. Like SLRs, these cameras come with large sensors and interchangeable lenses that produce high-quality images. But they don't have the conventional mirror-based viewfinders that reflect the image to the photographer's eye. Instead, the image is digitized, allowing for a more compact body.

ENLARGE

These mirrorless models range in price from about $300 to $1,700, compared with digital SLRs that vary from about $500 to several thousand dollars for professional ones, before costly lenses are added.

In an otherwise stagnant camera market hurt by the growing competition from smartphones, the mirrorless models are booming.

Shipments of compact cameras declined last year, but those of the new type nearly doubled from the previous year, with projections of a fivefold increase by 2015, according to market-research firm International Data Corp.

SLRs still are doing well, with shipments forecast to grow 18% this year to 16.76 million units world-wide, according to IDC. But shipments of mirrorless cameras are projected to increase 60% to 6.43 million units. Compact-camera shipments are forecast at 130.69 million units.

"It's given the industry a jolt," said Chris Chute, research manager at IDC's digital-imaging practice. "It resets the bar for what the high-end experience will be like."

The new mirrorless cameras have gained the most traction in Japan, where they accounted for nearly half of all shipments of interchangeable-lens cameras in second half, according to the Camera & Imaging Products Association trade group.

Mirrorless cameras accounted for 16.4% and 18.7% in North America and Europe, respectively.

The product transformation is evident at Pansonic, a 94-year-old electronics maker that entered the digital-camera market in 2001. The Osaka, Japan, company said sales of digital cameras fell 28% from a year earlier in the quarter ended Dec. 31, partly because of sluggish demand for point-and-shoot models. But, within the category, sales of mirrorless cameras rose 67%.

The new cameras especially are a hit among Japanese women. Budding female photo enthusiasts in the country are known as Camera Girls, and manufacturers are targeting them with nontraditional camera colors such as "fiery pink" and "sensual brown." The companies also offer accessories such as camera straps and cases meant to appeal to women.

Panasonic, which introduced the market's first mirrorless compact system camera four years ago, said it took lessons it learned then to the U.S. to sell its Lumix cameras.

Initially the company struggled, because it was targeting "everybody," said Shiro Kitajima, the head of Panasonic's consumer marketing in North America. Panasonic found in market research that women wanted to take better pictures without having to carry a bulky camera.

Panasonic targeted women in print and online advertisements on maternity and beauty sites. It also focused on selling the mirrorless cameras in stores frequented more often by women, rather than the male-dominated battleground of camera or electronics shops.

The strategy was a success. Panasonic said typically about 75% of SLR customers are male, but nearly 70% of the buyers of its mirrorless cameras are female.

"Nikon and Canon have a long legacy for SLRs. We don't want to play on the same ground," Mr. Kitajima said. "We tried to play it on our ground."

Nikon joined the mirrorless fray with its Nikon 1 series in October.

Canon remains the only major camera manufacturer absent from the segment. Many industry watchers expect Canon to release a mirrorless model this year.

Canon spokesman Hirotomo Fujimori declined to comment on product plans but said the company has the technological capability of releasing a mirrorless camera now. He said Canon has been testing a variety of ways to make cameras smaller and that mirrorless technology is an option.

Historically, SLR cameras have been lucrative because price competition has been less intense than in the more-crowded compact-camera segment. SLR cameras also can lead to sales of lenses and other accessories.

While the quality of mirrorless cameras can be close to that of low-end SLR cameras, premium model SLRs still offer greater photo quality because they have larger image sensors and have features that are important to professional photographers. For most amateurs, however, mirrorless models are sophisticated enough.

Wayne Rizal, a 32-year-old consultant in the Chicago area, decided two years ago to upgrade from his point-and-shoot camera when his first child was on the way. He considered buying an advanced SLR model from Nikon but opted for a mirrorless model from Sony.

He said the Sony offered much of the quality of the big-bodied cameras and could swap lenses but was smaller and simpler to use.

"With the mirrorless camera," Mr. Rizal said, "I could accomplish a lot of what I wanted out of the box, versus having to tinker a lot with an SLR to get some of the basic things done."

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